Dollar firm in Asia, resource shares on the run

SYDNEY, March 9 2017 : The dollar stood firm in Asia today and bond yields spiked after super-strong U.S. jobs data made a rate hike a near certainty, while oil nursed bruising losses as U.S. stockpiles swelled past all expectations.

Tom Porcelli, chief U.S. economist at RBC Capital Markets, said the report was so strong it meant the payrolls report tomorrow would have to be unbelievably dire to deter the Fed from hiking next week.

“There is almost no number that would stop them,” said Porcelli. “It would take an extreme event for the Fed to take a pass at this point.”

Indeed, he noted the ADP surprise meant there was a real chance payrolls could beat expectations, perhaps by a lot.

“On the face of it, ADP is consistent with private payrolls of about 340,000,” he said. The current median forecast is for a rise of 190,000.

With a hike seemingly certain, and more likely over the year, yields on two-year Treasury notes climbed to 1.378 percent, the highest since August 2009.

That widened its premium over German debt to a meaty 220 basis points, the largest gap since early 2000. That is a burden for the euro that is likely to only get heavier as the European Central Bank seems wedded to its super-easy policy.

The central bank meets later today and is considered unlikely to tighten until the latter part of this year or early 2018, a Reuters poll found last week.

The single currency was stuck at $1.0540 in Asia today, well off a $1.0640 top hit early in the week.

The dollar index was last up a whisker at 102.110, and close to a March 2 peak of 102.26. The dollar edged up to 114.52 yen, having been as high as 114.75.

The firmer dollar pressured a host of commodities from iron ore to copper, which touched a seven-week trough.

Spot gold was nursing a grudge at $1,206.75 having struck a five-week low as higher interest rates raised the opportunity cost of holding the non-yielding metal. – Reuters